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You can tell Secretary Volpe, as we did last year, that we will hear him near the close of the hearings with respect to the entire Department and any other matters he wants to present to us, particularly with reference to the Office of the Secretary.

REVIEW OF THE CURRENT BUDGET SITUATION

I see we have our friend Bob Prestemon here, the Budget Officer of the Department, one of the really able budget officers in any agency of this Government. Of course, as we all know, the Budget Officer is one of the most important individuals in any of the departments.

We welcome you, Bob, to this hearing.

Since the January budget was revised in April, since several important authorizations have not yet been enacted, since the President has announced his intention of reducing expenditures, and since 2 months of fiscal year 1970 have elapsed, the committee has asked Mr. Prestemon to give us a brief statement at the beginning of our hearings touching on these matters so that we may be as current as possible on the status

of the budget proposals. Bob, we will be glad to hear you now.

GENERAL STATEMENT

Mr. PRESTEMON. Thank you.

Mr. Chairman and members of the committee, we are happy to be here to present the budget of the Department of Transportation for fiscal year 1970. My purpose is to give you a very brief overview of the estimates now before you and to summarize the major changes which the President made in the estimates of the previous administration's budget. These were made in a series of budget amendments transmitted to the Congress last April 15, and shown in House Document 91–100. I will also give you a quick rundown on the major pending authorization bills relating to several of our budget estimates. Finally, I will cover briefly the situation regarding possible reductions in fiscal year 1970 outlays that may be required to achieve the President's fiscal objectives during the current budget year.

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The Department is requesting appropriations in fiscal year 1970 totaling $6,557,673,630, of which $1,875,673,630 is for budget authority and $4,682,000,000'is for liquidating cash appropriations for the Federal-aid highway programs. As you know, budget authority in the form of contract authorizations are provided for the highway programs in the biennial highway acts. For fiscal year 1970, these contract authorizations amount to $5,575,000,000 for the Interstate and A B C programs, including advance acquisition of rights-of-way,

and a total of $49 million for the forest and public lands highway programs. New contract authorizations of $100 million are also available in fiscal year 1970 for the State and community highway safety programs.

The total amount of new budget authority represents a net increase of $198 million over fiscal year 1969. The increases are heavily concentrated in the Federal Aviation Administration for additional con

trollers and stepped up facilities procurement and research and development programs. Significant increases are also being requested for Coast Guard operating expenses and for its new research and development program.

Increases in liquidating cash appropriations over fiscal year 1969 total $440 million, some $375 million of which is to pay obligations incurred under the Federal-aid highway programs of the Federal Highway Administration.

Each of the witnesses to follow will speak to the programs and proposals including specific reference to the requested net increases in our fiscal year 1970 budget. In general, increases relate to (1) the rapidly growing demands on the Federal airways system caused by aviation growth, (2) workload increases in all elements of the Department, especially in programs affecting the public safety, (3) more emphasis on the Department's research and development programs, and (4) the normal and planned buildup of outlays for the Federal-aid highway program. In short, the increases reflect a rapidly expanding economy and the need to finance the Federal transportation programs which support it.

BUDGET REVISIONS

The Department's budget now before you reflects various revisions of the estimates transmitted to the Congress last January by the previous administration. On January 25, 1969, President Nixon directed all agency heads to make a careful and tough review of their pending budgets. This resulted in amendments to the DOT budget which provided net decreases of $49.8 million for budget authority and a reduction in liquidating cash appropriations of $116.5 million.

Most of the budget authority reductions were concentrated in cutbacks of earlier proposals for personnel increases and selective reductions in lower priority research projects. Liquidating cash appropriation estimates were reduced mainly for the highway programs, the grant program for State and community highway safety, and highway beautification. In part, these reflected reestimates based on more current information on fiscal year 1970 cash requirements in the light of projected obligation rates. Reductions in program levels were also involved in some cases.

Nonetheless, the resulting amended budget which you have before you reflects, in the Department's judgment, a balanced will support further progress in meeting the transportation needs of the Nation.

The estimates before you do not include amounts for civilian and military pay increases which were effective on July 13, 1969. As in the past, supplementals for these costs—which may amount to as much as $100 million—will be submitted in January.

I'll present now a summary of the status of various authorization bills which relate to the estimates before you.

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PENDING AUTHORIZING LEGISLATION

The Coast Guard authorization bill (Public Law 91-49) was enacted into law on July 22, 1969. It authorizes $142.8 million for acquisition of vessels, aircraft, and facilities. The budget estimate for fiscal year 1970 is $77.3 million.

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The administration's proposed Aviation Facilities Expansion Act of 1969 was introduced in June (H.R. 12374 and S. 2437). Hearings on the bill have been held by the House and Senate Commerce Committees, but neither has reported. Action will also be required by the House Ways and Means and Senate Finance Committees on the associated user tax measures which are an integral part (title III) of the bill. The bill expresses the Federal Government's commitment to a 10year program of expansion and improvement of the Nation's airport and airway system, and to support the program the bill would establish a designated account in the Treasury financed by existing and proposed air user taxes. The act calls for annual appropriations of $250 million for new facilities and equipment to modernize and increase the capacity of the airways. Higher appropriation levels for airways research and development are also contemplated. In addition, the act would authorize a total of $1.25 billion in Federal aid for airport planning and development over the next 5 years—$180 million in fiscal year 1970, $220 million in fiscal year 1971, and up

to a total of $850 million for the remainder of the 5-year period. I should stress that none of the estimates before you now is contingent upon passage of this legislation, but the source of funding for the programs may be affected in fiscal year 1970 and later years.

The House Interstate and Foreign Commerce Committee reported out H.R. 10105 on July 8, 1969, which would authorize appropriations of $23 million in fiscal year 1970 and $35 million in fiscal years 1971 and 1972 to carry out provisions of the National Traffic and Motor Vehicle Safety Act of 1966. While the Senate Commerce Committee has also held hearings on this bill, we are now awaiting floor action. Our fiscal year 1970 appropriation request for FHWA's traffic and highway safety program is consistent with the amounts reported by the House committee.

On August 11, 1969, Secretary Volpe transmitted to the Congress the proposed "Public Transportation Assistance Act of 1969” (introduced as H.R. 13463) which would provide authority for a Federal commitment of loans and grants leading to the development of urban transportation systems. The bill provides contract authorizations of $300, $400, $600, and $800 million and $1 billion during the program's first 5 years beginning in fiscal year 1971 and expresses the determination of the Congress that success in meeting the urban transportation challenge will require a “Federal commitment to the expenditure of at least $10 billion" over a 12-year period. The request for $250 million in an advance appropriation for fiscal year 1971, which is in the materials you now have, assumed an appropriation authorization for that amount. It has essentially been superseded by the new bill which the administration has proposed.

That covers the main authorization bills which affect the Department's estimates.

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OUTLAY REDUCTIONS

The final area I wish to discuss concerns possible outlay reductions which may be required in the total estimate approved last April as part of President Nixon's revision of the budget transmitted in January. The President has determined to hold outlays to the April figure of $192.9 billion. Because of unforeseen increases in uncontrollable

programs and other factors, this outlay can be achieved only if spending in controllable programs is reduced by some $3.5 billion. The President has directed the heads of all departments and agencies to examine all their programs for places where reductions can be made or stretchouts programed to achieve the target figure. Final decisions on what our Department's share of this cutback will be have not been made.

The ultimate allocation of these reductions will inevitably be influenced not only by final congressional action on appropriation bills but on shifting circumstances and priorities as well.

As soon as we have firm information on the cutbacks DOT will have to take, we will, of course, be prepared to make the information available to this committee.

That concludes my summary, Mr. Chairman. Mr. Baker and I will be happy to answer any questions. Admiral Smith and his able associates are here to begin the presentation of the Coast Guard's budget for 1970

Thank you.

FUNDING FOR PENDING LEGISLATIVE AUTHORIZATIONS

Mr. BOLAND. Thank you, Mr. Prestemon.

You called the committee's attention to the Nation's airport and airways system under the Secretary's recommendations with respect to the Aviation Facilities Expansion Act and also the Public Transportation Assistance Act. Then you mentioned the funding of these two programs.

Do either of these provide for annual review by congressioal committees?

Mr. PRESTEMON. The Aviation Facilities Act does involve annual reviews of requests for appropriations. No contract authorizations are provided in the act.

Mr. BOLAND. Annual appropriations for the Aviation Facilities Act?
Mr. PRESTEMON. Yes.
Mr. BOLAND. What about mass transportation ?

Mr. PRESTEMON. In that case the proposal is to authorize contract authority for each of 5 years, the first 5 years of the proposed 10-year program. Annual programs and liquidating cash requests will be reviewed in the same way that you review annually the programs for the State community highway safety program, for example.

Mr. BOLAND. Except by reason of the contract authority, the Department can go ahead and make the contracts and all they have to do is present us with the bill and that is it. We have to pay it.

Mr. PRESTEMON. We will submit requests annually for cash appropriations.

Mr. BOLAND. And if you went into a contract there is an obligation on the part of the Government to pay the bill ?

Mr. PRESTEMON. Yes, sir,

ADVANCE-FUNDING REQUIREMENT FOR PUBLIC TRANSPORTATION

Mr. BOLAND. What about the argument—and I think the Secretary has used this argument—that this is the best way to finance it because communities can be assured that this program will be continued and funds will be available ?

What has been wrong with the present funding program for mass transportation grants where we forward fund each

year? In this budget, for example, you ask $250 million for fiscal 1971. You have $175 million for fiscal year 1970 which was appropriated last year-in fiscal year 1969. Under this arrangement, haven't the cities been able to yardstick their programs and count on whatever agreements have been made with the Department to fulfill the Federal Government's obligation for projects you have approved ?

Mr. BAKER. The largest problem by far in terms of financing concerns new systems in the major metropolitan areas. Typically, these projects are active over a 10-year period and the related funding commitments usually extend 20 years or longer.

In the cities of Los Angeles, Atlanta, and Seattle-as recent examples the electorate simply failed to approve the necessary bond issues to finance the systems the cities were planning to build. Three issues appear to be involved here—first, the confidence of the electorate in the Federal Government's long-term commitment to funding this kind of program; second, whether local officials would feel sufficiently confident to go ahead and issue the necessary bonds in the absence of such a Federal commitment to the program; and, finally, whether the underwriting community would regard the bonds as sufficiently well supported obligations to issue them at reasonable rates of interest. If the city of Seattle, for example, proposed issuance of long-term, generalobligation bonds, there seems to be no question that they could have sold them. The issue was the interest rate. The Department and the Administration have thus concluded that some measure of long-term government commitment is necessary, and in order to get support from the electorate, as well as local officials, for this kind of funding program.

There is no question at all that some of what might be described as the intermediate or small programs, such as grants to cities for a few buses and other minor facilities, could be funded on a simple year-to-year basis. But major programs would constitute a significant part of the proposed $10.1 billion—in capital improvement grantsover a 12-year period; perhaps as much as $8.5 billion. These programs would involve refurbishment of existing system in places such as Boston, and installation of completely new systems in places such as Seattle.

The bill the administration has proposed is designed to provide a reasonably long-term program initially covering the years 1971 through 1975. It would be reviewed annually, however, by the authorizing committees of Congress to determine what levels of contract authorizations should be provided for succeeding “add-on” years of the program.

BOND ISSUE REJECTIONS

Mr. BOLAND. Do you have any figures on the number of bond issues which have been rejected by the voting public in specific areas? I refer to mass transportation projects.

Mr. BAKER. Not in detail, Mr. Chairman. I shall be glad to provide these to you. Of course, the major examples of immediate concern to us have been cited.

Mr. BOLAND. From my reading of the press I would conclude that most areas have rejected bond issues because the taxpayers felt taxes

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